Builder’s risk insurance higher for wood frame buildings: Report

Builder’s risk insurance higher for wood frame buildings: Report

A recent study commissioned by the Concrete Council of Canada found that there is a considerable difference in the risks and insurance rates for the construction of wood frame buildings compared to concrete buildings.

"Our objective with this study is to provide credible information on a level playing field basis about the use of various building products, whether it is concrete, steel or wood," said Concrete Council of Canada chair Chris Conway.

"This study is one part of a larger effort to get accurate information out there about our products, while at the same time trying to correct and clarify any misconceptions about other products," Conway added.

Globe Advisors’ report focused on the property insurance differences between wood frame buildings up to six storeys and structures that utilize several non-combustible materials such as cast-in-place concrete, precast concrete, concrete blocks and insulated concrete forms.

"When you look at the studies we have had access to about building material choices and how they are perceived by builders and architects, wood is favoured primarily in two categories, cost and speed," Conway elaborated.

"Concrete is perceived as having many favourable attributes, such as resiliency, strength and lifecycle durability. Really, what this study does is it addresses the issue of perceived cost."

The report, using data from interviews with three underwriters and the Canadian Wood Council (CWC), discovered that builders' risk insurance rates per $100 monthly for comparable wood and concrete buildings are, on average, $0.008 for concrete and $0.053 for wood.

With CWC’s rate for wood frame insurance excluded, the average rate for wood buildings increases to $0.06. The CWC’s rate was noticeably lower than the rates provided by the interviewed underwriters.

The study concluded that builders' risk insurance rates were 7.5 times higher for the construction of wood mid-rise buildings compared to those made of concrete. The report reasoned that this difference was due to the higher risk of fire and the greater risk and repair costs of water and moisture damage for buildings using wood frames.